The state should just say no

Thursday

Dec 27, 2012 at 12:01 AMDec 27, 2012 at 3:41 PM

John Hood / John Locke Foundation

RALEIGH — Politicians of all parties, at all levels of government, have been debating health care virtually nonstop since the early 1990s. If you’re tired of hearing about it, I have some bad news about the new year. Health care is going to be a key political issue in 2013, perhaps even the dominant one.

At the federal level, the budget debate will inevitably center on health care, the fastest-growing major category of federal spending. And here in North Carolina, among the first decisions that new Gov. Pat McCrory and the General Assembly will have to make is whether to assist the Obama administration in implementing its costly and unpopular health care legislation.

I expect that state leaders will say no. I expect them to say no to building and funding a state-run health insurance exchange for two reasons. First, regardless of the apparent structure of the exchange, all the important policy decisions will be made in Washington, not Raleigh. Second, a federally run exchange has practical and legal problems that, once manifested, will give Republicans and moderate Democrats in Congress the leverage they need to rescind or rewrite Obamacare’s most-egregious provisions.

I also expect North Carolina policymakers to say no to expanding Medicaid, which is the single-biggest part of Obamacare in scope and cost. Even in its current form, Medicaid has become a fiscal black hole for state government. Resources that might otherwise have been spent on education, public safety, or transportation, or returned to the private economy in the form of lower taxes, have been sucked into Medicaid’s event horizon. Expanding the program would be the ultimate triumph of hope over experience, with the fantasy of “free federal money” thrown in to bamboozle the credulous.

Despite more than two decades of intense discussion about health care, there still remains a wide gap in perception of the nature, causes, and potential solutions of problems such as medical inflation and inadequate access. Both sides hold on to much-cherished “facts” that are really highly debatable propositions, or even clearly demonstrable falsehoods.

Many conservatives, for example, cling to the notion that American health care, for all its flaws, still has the virtue of being an overwhelmingly private, market-driven system with some government intervention on the margins. The truth is that American health care is already a complex mixture of public and private institutions in which taxpayers fund fully half the total bill (through Medicare, Medicaid, and other programs) and in which government bureaucrats already make many significant decisions about the practice of medicine and the structure of health care markets.

Many liberals cling to the notion that American health care, despite consuming vastly more resources than European or Asian countries expend on health care, has worse outcomes. The first part of that proposition, relatively high U.S. spending, is true but exaggerated. Cost is denominated in more than dollars. While American patients, insurers, and governments pay more to receive more timely service from hospitals or doctors, in other countries the dollar costs are lower but other costs – the time and suffering associated with longer waiting periods – are higher.

The second part of the proposition, that the outcomes of the U.S. health care system are substandard, is simply false. It is true that the average European or Asian lives longer than the average American, but this isn’t due to differences in health care access or delivery. In an Organization for Economic Cooperation and Development report, America’s average life expectancy was estimated at 75.3 years, ranking us 19th out of 29 countries. But when the data were adjusted for the rate of fatal injuries, such as car crashes and homicides, American life expectancy was 76.9 years – the longest in the developed world.

We obviously have a long way to go to achieve a consensus about what’s really going on in health care, much less what to do about it. Obamacare won’t be the final answer. Investing significant time and money to implement it would be foolish and counterproductive.

John Hood is president of the conservative John Locke Foundation, which is based in Raleigh, and author of “Our Best Foot Forward,” a book on North Carolina’s economy. It is available at JohnLockeStore.com.